Last week, the Pittsburgh Post-Gazette reported that a leading food manufacturer was being sued by one of its packaging suppliers.

The lawsuit was sparked by the specifications used in an RFP issued by the food manufacturer.  Specifically, the RFP was requesting bids for the snap tops used on the food manufacturer’s ketchup bottles.  And, the supplier claims that the design of those snap tops belongs to the supplier, not the food manufacturer.  As such, the supplier claims that the specification included in the RFP is their proprietary information, it was provided to competitors, and that violates the terms of a confidentiality agreement between the supplier and the food manufacturer.

In other words, the supplier is claiming that the food manufacturer illegally disclosed the supplier’s trade secrets for the purpose of driving down costs.  Obviously, every procurement department issues RFP’s to drive down cost.  But violating intellectual property rights in doing so is clearly wrong.

The food manufacturer will vigorously defend itself.  In my decades in procurement, I’ve seen many incumbent suppliers cry “sour grapes” when competitive bidding is introduced into a once single source relationship, even when the buying organization did nothing wrong.  And there are always the proverbial “three sides to every story.”  So, we will not presume that the food manufacturer’s procurement team did anything wrong.

But we will use this opportunity to issue advice:  Never use a supplier’s proprietary design as your RFP specifications!  Verify who developed and owns the specifications before you ever provide them to one or more suppliers, whether issuing a formal RFP or informally exploring whether a new supplier can serve your organization.  Make a mistake, and you could end up in some serious hot water (just like the tomatoes used in making ketchup).

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is the Founder of the Next Level Purchasing Association. Charles is also the Co-Author of "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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